Hindustan Media Ventures : Excellent portfolio buy for long trem investor at CMP 218-220 one year Target of Rs 300

About Company : HMVL is in business of print media publisher of Hindi daily news paper’HINDUSTAN” and couple of Monthly/fortnightly magazines such as KADMABINI & NANADAN.

“HINDUSTAN’ is the 2nd most widely read newspaper in the country, has become synonymous with progress. Through its editorials, its reporting, its analysis and the causes it espouses, it is a fighter for change and progress. Please refer historical performance of company in last 3 years which are considered to be of low growth years.

                                    FY 14                                  FY 13                       FY 12

Total Revenue         760.3                                      664.7                    615.8

EBITDA                     181.8                                       141.0                    114.5

Profit after Tax         111.2                                      84.5                       65.3

Share Capital             73.4                                       73.4                        73.4

Reserves & Surplus   535.8                                  434.9                        360.7

EBITDA Margin             23.9%                             21.2%                        18.6%

Net Profit Margin        14.6%                               12.7%                         10.6%

EPS (Basic & Diluted)      15.15                               11.52                          8.90.

It is remarkable to see that company has been growing at decent pace and also improving upon the profit margins over the years significantly which is appreciable.

Major revenue for newspaper companies comes from advertisement. HMVL is catering  mainly to Hindi news paper readers where growth of readers is higher in comparison to English paper readers major reason could be growth of digital media more and more people are reading news on internet now a days which is affecting English news paper growth. Not withstanding these challenges, the regional newspaper industry continues to offer promising growth prospects, going forward. The rise in literacy rates, significant population growth, high aspirations, resilience of the agrarian economy, increasing demand for region-specific content, and expansion by players into new geographies and languages will continue to drive future expansion of regional (particularly Hindi) newspapers’ circulation and readership across India.

Also, as consumer sentiment regains confidence with improvement in economic conditions, companies will allocate greater expenditure to advertising, especially in Tier II and Tier III cities to target their next level of growth which would be boon for newspapers.

2015 Financial Performance : HMVL has already achieved revenue of 617 crores in 9 month period of 2014-15 and expected to cross 800 crores with expected EPS of 20 for the year. At a forward PE multiple of 10 the stock looks cheaper at CMP of 212-220.

Promoters hold majority holding of 75% and FII & DII hold approx. 15 % so only 10% is available with public

Target Price: Due to expected improvement in economy company can easily deliver much better results with improved margins for next 1-3 years and could deliver EPS Of 25 , 30 and 35 in next 3 years. The stock should be bought by long term investors for excellent returns in next 2-3 years a true multibagger in making. It has potential to touch 700 in long term( 3 years)